Miners will fight nationalization

May 7, 2012

One day after Argentina nationalized the largest oil firm in the county Glencore chief executive officer Ivan Glasenberg spoke up for mining companies at a conference in Switzerland and said mining companies will fight growing resource nationalism and could pull out of countries where governments are demanding too large a share of the pie.

"The mining industry is forming tight groups among each other on how we are going to fight it...," Glasenberg said.

Glasenberg, whose company is in the middle of a tie-up with miner Xstrata, warned that Glencore would not hesitate to withdraw investments in places like Africa if governments change the terms of existing contracts in their favor, Reuters reported.

“African states are going to have to be very careful because there are minerals all over Africa and if they start this nationalism or if they start taking a bigger profit, we will go elsewhere,” he said.

Glencore, the world’s largest diversified commodities trader, operates across Africa, with key production assets on the continent in South Africa, the Democratic Republic of Congo, Zambia and Equatorial Guinea.

Glasenberg also said Xstrata was holding back on the big copper investment in Argentina.

Argentina's Congress voted on Thursday to nationalize YPF, seizing a majority stake from Spain’s Repsol. The move has drawn swift reprisal from Spain and has prompted warnings that Argentina risks scaring off much-needed foreign investment.

Major miners across the sector have been reviewing their investment in major greenfield projects, as they come under pressure from shareholders to do a better job of balancing investment in growth and returns for investors.

Swiss-based Glencore is currently seeking shareholder backing for a $37 billion takeover of Xstrata. The structure of the deal requires 75 percent of shareholders excluding Glencore to approve it.

Glasenberg said that the deal was broadly supported but that shareholder demands were not yet resolved.



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